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Another jobs-killer that needs repeal

I’ve said it before, but it bears repeating. Rather than tinkering with the tax code and calling it a “jobs bill,” Congress and the Obama administration might try scouring the U.S. Code in search of job-killing laws to repeal. And as I am hardly the first to notice, one of the worst job-killers in federal law is the Davis-Bacon Act. Adopted in the 1930s to "stabilize" the construction industry (in part by protecting white workers in the North against competition from migrating Southern blacks), Davis-Bacon requires employers to pay the "prevailing" local wage as calculated by the Labor Department on federally-funded projects. By artificially raising labor costs on public projects, Davis-Bacon both reduces employment and soaks taxpayers. The main beneficiaries are the construction unions whose jobs it protects.

Yet Davis-Bacon not only remains on the books; at organized labor's behest, and with the support of President Obama, Congress further entrenched and even expanded it in the $862 billion stimulus bill. The law says that "all laborers and mechanics employed by contractors and subcontractors on projects funded directly by or assisted in whole or in part" must get the "prevailing" wage as per Davis-Bacon and related laws. That ensured coverage for some $49 billion in transportation construction that would probably have faced "prevailing wage" strictures anyway -- but also for $5 billion worth of Energy Department home weatherization projects, an area that was previously outside Davis-Bacon's scope.

The inevitable result has been less job creation at a slower pace than would have otherwise occurred. Obama said last year that the home weatherization program would "right away put people back to work." Actually, it took months to write new prevailing wage rules for more than 3,000 U.S. counties, during which time hardly any work took place. As of Dec. 31, 2009, only 9,100 homes had been weatherized out of 593,000 planned through 2012, according to a recent report by the Government Accountability Office. The GAO also reports Davis-Bacon-related delays in a separate federal grant program to remove lead hazards from certain homes.

Even if there had been no delay, Davis-Bacon would not have served the public interest. The law does not protect wages against an artificial drop due to a flood of federal construction money -- it forces an artificial increase. Davis-Bacon sets wages based on calculations by the Labor Department’s Wage and Hours Division, rather than statistics from the Bureau of Labor Statistics. The Wage and Hours Division’s formula, heavily influenced by union lobbying, "calculates, not the prevailing wage, but the wage that would prevail if the wage-setting process were dictated by the construction unions," according to a study by the Beacon Hill Institute at Suffolk University. The result is "prevailing" wages that are 22 percent higher, on average, than those documented by the impartial Bureau of Labor Statistics.

The Obama administration says that the weatherization delays are over, and that, since Jan. 1, weatherization has been proceeding at its intended pace of 20,000 homes per month. That's good to know, but the fact remains that the weatherization program, and indeed the stimulus plan as a whole, won't create as many jobs as it would have without Davis-Bacon. Not to mention the fact that winter is almost over, so the promised energy conservation impact will take that much longer to materialize.

In its defense, the administration says the goal of the stimulus bill was not just to create jobs, but relatively well-paying jobs, so as to boost family incomes. No doubt the lucky ones who actually get a piece of the federal pie will find this argument convincing. But what is the president going to tell all the willing workers who end up with zero jobs and zero income? Or the taxpayers who are getting less-than-optimal job-creation "bang" for their stimulus bucks? In boom times, Davis-Bacon's protectionism is merely pernicious. In an economic emergency of this magnitude, it's outrageous.

By Charles Lane  | February 23, 2010; 3:55 PM ET
Categories:  Lane  | Tags:  Charles Lane  
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Didn't you write this same exact post about a month ago? This is why I dropped my subscription to the Post.

Posted by: hoos3014 | February 23, 2010 4:48 PM | Report abuse

Davis-Bacon also ensures that high-skill workers are paid a good wage and that contractors the gov't hires aren't hiring unskilled people to drive their cost down and win the bid, thus resulting in well-built infrastructure that won't need as many repairs as it ages.

Your statement that it hoses the taxpayers does not take into account the fact that those workers will be better able to support themselves and not use public assistance, be able to contribute to the local economy (boosting job demand overall), and provide a home in a good neighborhood for any children- reducing THEIR chances of dropping out, becoming involved with the justice system, and depending on public assistance themselves.

Posted by: Jess84 | February 23, 2010 5:01 PM | Report abuse

My comment to you:

You sir are a moron who would like nothing more than to see us all making 7 dollars and living in company houses and buying dry goods from the company store. People like you are why these laws were enacted--havent you gotten your fill lately from the destruction of the middle class did not that please your shadowmasters enough?

Ahh i forgot you will not be happy until their are only 2 classes in the world. The Surfs and the Rulers

Sorry stupid we will not let that happen.

Posted by: scon101 | February 23, 2010 5:51 PM | Report abuse

I wonder when people realize that the reason we have been losing jobs to the overseas markets is because we pay those people too much here to do what is largely minimal skill labour.

Of course we could prevent that migration of jobs and keep our artificially high wages by buying American products. Shame people aren't willing to pay the higher prices to do so.

Whose fault is it then? I'd say it is ours. The Consumer that wants low cost goods.

Posted by: BradG | February 23, 2010 6:32 PM | Report abuse

I have never found Davis-Bacon "prevailing wages" to be a problem, even as a general contractor in the Deep South (NW Florida). For example, the pay for painters, drywall installers, etc must be at least $9 an hour. That is not a high wage for any area.

Admittedly I have no experience up North, but so far no problems down here.

Posted by: billmcb320 | February 23, 2010 7:50 PM | Report abuse

Who in the hell is this moron? Getting rid of Davis-Bacon would only result in MORE illegal aliens taking over jobs in the construction industry that at one time, and not that damned long ago either, provided a solid, middle-class living.

I am on construction sites every day. I am hearing english spoken on these sites less and less every day. Do not tell me that there are not illegals in the mix: we are finding that illegals ARE the mix. Illegals are doing jobs for LESS than minimum wage (against the law but I'm guessing this moron wants that "job killer" eliminated also. These are jobs that used to buy a home and put kids in college. I sure as home someone puts this f_ucking moron out of his ignorant misery soon.

Posted by: spike59101 | February 23, 2010 8:56 PM | Report abuse

The answer is simple: cut defense spending by half and give everyone a huge tax cut.

Posted by: hithere2 | February 23, 2010 8:59 PM | Report abuse

Jobs bill? Tell it to the Union's. Bill meant re-negotiating contracts and more money for the Union's. There will never be a Job bill until the Union's are put in their place and that's out the door standing on the outside and having nothing to do with any jobs bill. No impute from the Union's what so ever.

Posted by: houstonian | February 23, 2010 9:27 PM | Report abuse

Lane is yet another right-wing hack who does not think anything through before hitting his keyboar.

Repealing Davis - Bacon, you twit, would encourage the employment of cheap, low-skilled workers to fill high skills, higher-paying jobs,hence result in shoddier construction, higher safety risks, and higher insurance premiums for the contractors that would be passed along to customers.

Another brilliant idea from a WaPo intellectual midget!

Posted by: Gatsby10 | February 24, 2010 6:56 AM | Report abuse

If the Government really wanted to protect American Jobs they would kill the Foreign Investment Tax Credits Corporations get for building new manufacturing plants in Foreign Countries and later closing plants in the US.

Posted by: ddoiron1 | February 24, 2010 8:27 AM | Report abuse

What is the neo-con crap?!!!

Anything that protects wages and adds cost to employers is evil and job-killing? I am so sick of this voodoo economic mantra being spewed as if it made sense. Unskilled, menial labor!...F--- you, you condescending schmuck!

This country was based on the belief that any honest working men should be able to support a family on his wages...not get rich, just pay the bills. Your "they're only burger flippers" attitude means a nation of marginalized, 70-hour a week working poor with latchkey children who grow up with no respect for this country or the law.

You really are a perfect example of the kind of thoughtless fools responsible for the evil in the system. Rot in Hell.

Posted by: joebanks | February 24, 2010 9:13 AM | Report abuse

Lane is a quack. If they elliminate Davis Bacon instead of updating it corporate America will do to construction jobs what they did to factory jobs. In factories they cut wages or benefits to the bone and if unions didn't agree moved the factories to Mexico our China. In this case they will bring in immigrant labor. Lane tries to make it sound like a noble jobs program but its just "more of the same" that has already seriously harmed our economy. It will leave american workers in worse shape then they already are while the fat cats will get richer and fatter. Anyone who thinks union workers are on the gravy train needs to think again. They are our most highly trained and skilled workers and without unions and their training our product quality will continue to decline. For the record Im not a union member, just factually informed.

Posted by: tryreason | February 24, 2010 10:12 AM | Report abuse

I keep hieing conservatives attack unions. Let us remember why unions were started.


Posted by: noizeboy | February 24, 2010 10:25 AM | Report abuse

UNION WORKERS ARE BEING PAID TOO MUCH. OH MY GAWD! Think of all the jobs we could create if we just cut EVERY ONE'S pay in half. What prosperity that would bring.

Posted by: jamessyl | February 24, 2010 1:00 PM | Report abuse

You should continue to write this column every month . Maybe the taxpayers will finally get it. If we paid truly competitive "fair"wages for publicly funded infrastructure our money would build much more infrastructure We cannot afford this extortion and fabricated numbers to pay coffee drinkers these outlandish wages. This is a direct deposit from the taxpayers to the overflowing union coffers

Posted by: marden08 | February 25, 2010 7:56 AM | Report abuse

Fortunately, several municipalities have refused ARRA/stimulus funding because it would cost them more to pay the "prevailing wage" (i.e. union) for labor. And that's even after including the "free" ARRA money from the fedgovt. So at least there are some counties and cities that think of their taxpayers first.

Posted by: millionea7 | February 25, 2010 2:24 PM | Report abuse

billmcb320 said:

"I have never found Davis-Bacon 'prevailing wages' to be a problem, even as a general contractor in the Deep South (NW Florida). For example, the pay for painters, drywall installers, etc must be at least $9 an hour. That is not a high wage for any area."

it depends on what county in Florida you operate in. the drywall hanger rates are $15 an hour in Alachua County, $11.28 an hour for painters in Alachua. Miami-Dade rates are much higher. some counties are cheaper.

here's Florida's Davis-Bacon rates:

are you compliant, billmcb320? better question, are you profitable?

Posted by: millionea7 | February 25, 2010 2:35 PM | Report abuse

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